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One we saw coming Aleris inks agreement to buy wabash alloys

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The two leading U.S. secondary aluminum smelter groups will become one during the third quarter, provided no glitches derail a definitive agreement for Aleris International Inc. to buy Wabash Alloys LLC from Connell LP for $194 million.

Beachwood, Ohio,-based Aleris touched off industry guesswork regarding possible plant closings and how large a role will be given to Wabash executives in the combined operation. The Wabash, Ind., company is the largest U.S. producer of secondary aluminum alloys.

The industry perception was that Wabash managers have closer relationships to scrap suppliers and die casters than their counterparts at Aleris, created via a 2004 merger of Imco Recycling Inc. and Commonwealth Industries Inc. Some of Aleris' key executives have a specialty chemicals background.

How much the Wabash company culture might change under Aleris is one variable that other market participants will be watching.

Neither company would elaborate on a short press release, which put Wabash's 2006 revenue at a bit more than $900 million and its employee roster at more than 700. Meanwhile, Aleris, a larger company of worldwide scope and several lines of business, reported 2006 aluminum recycling revenue of $1.49 billion, some of it from Europe and Latin America.

The $194-million purchase price is subject to certain adjustments for working capital and other items.

The U.S. aluminum specification alloy industry, with scrap metal as its intake, has an estimated total capacity of 300 million to 350 million pounds a month. The higher figure was used recently by Wabash's president, Bruce Warshauer.

Wabash likely operates one third of that capacity.

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